NEW YORK TIMES

Signs indicate that Obama's debt ceiling gamble may be paying off

By Jackie Calmes

New York Times

POSTED: 1:30 a.m. HST, Oct 16, 2013

WASHINGTON » More than two years ago, President Barack Obama was still in the thick of his previous showdown with Republican House leaders over the nation's debt limit when he called five senior advisers into his office. He did not ask their advice, one said. Rather, he told them, in a way that brooked no discussion: From now on, no more negotiating over legislation so basic and essential to the economy, and the country.

"I'm not going through this again. It's bad for democracy. It's bad for the presidency," Obama said, according to the adviser, who declined to be identified describing internal discussions.

The president then told the group — his Treasury secretary, chief congressional lobbyist, chief economic adviser and both his and the vice president's chiefs of staff — to spread that word, "even in your body language."

Since then, so has Obama.

To make his message on the debt ceiling stick, he had to deliver it, repeatedly, not only to Republicans convinced that he would "cave," as many often have said, but also to business groups, the broader public and even to Democrats in Congress. Failure could shake not only the economy, but also Obama's presidency, given his reputation, fair or not, for drawing red lines and then watching foes cross them.

The current fight is hardly over, yet the steady retreat of House Republicans since late last week, when they first proposed a short-term increase in the debt limit without policy strings, suggests that Obama's big gamble could be paying off. It is a stand that was, and still is, fraught with risks if neither side backs down.

But scorched by the July 2011 fight that hurt the economy and his political standing (though not so badly as the Republicans'), Obama was determined to undo the precedent he had set by making concessions — in that case, more than $2 trillion in spending cuts over 10 years, including the across-the-board reductions known as sequestration — so that Congress would ensure that the government paid its bills.

The year began with an early test of the president's approach, and, for a time, it was vindicated. With Obama having been re-elected and Republicans chastened by November losses, House Speaker John A. Boehner announced a less confrontational course, with support from the most conservative lawmakers, at a party retreat in Williamsburg, Va.

Instead of demanding one dollar in spending cuts for every dollar increase in the debt ceiling, as before, Republicans set two new conditions for agreeing to suspend the borrowing limit at the time: Senate Democrats had to pass an annual budget for the first time in four years, which they subsequently did, and House Republicans had to pass one that proposed a balanced budget in 10 years, instead of three decades as their recent budgets had. There were no demands on Obama.

Conservatives came to oppose the so-called Williamsburg Accord, and by summer they were demanding repeal of "Obamacare" in return for raising the ceiling. Boehner had revived his dollar-for-dollar demand in August, but by September he had been pressed into the conservatives' cause against the health care law.

Obama, in response, virtually campaigned for his no-negotiations stand.

He had the united backing of congressional Democrats. "It took very little persuasion," said Sen. Charles E. Schumer of New York. "The theory is very simple: It's that if you do it now, we'll be doing it every three months."

But the House Republican majority, dominated by Tea Party conservatives who scorned the default warnings, was widely seen until last week as less likely than Obama to flinch. Boehner, at an August fundraiser in Idaho, promised "a whale of a fight."

As this week's deadline neared, the investor Warren Buffett, among others, likened threatening default to a kind of economic nuclear warfare. The White House approached the confrontation with the gravity of those October days a half-century ago when President John F. Kennedy stared down Nikita Khrushchev over the Soviet Union's nuclear missiles in Cuba. If Obama blinked this time, he and his advisers believed, he would invite more showdowns and threaten his already limited leverage to enact the rest of his second-term agenda.

Yet however justifiable Obama's stand might be, even supporters say that in the event of a crisis the nation and the world would look to the president — both to seek help and apportion blame. These stakes made Obama's no-negotiations stand a more hazardous one than his similar position in the parallel fight with Republicans over funding the government in the fiscal year that began Oct. 1. That impasse forced a government shutdown now in its third week.

In both instances, Obama has said he will negotiate with Republicans on anything — once they reopen the government and raise the debt ceiling. But they have sought to blame his stance for whatever the consequences.

National polls have more Americans siding with the president. "The Democrats' argument for an up-or-down vote on opening the government and keeping it open trumps the Republicans' accusation that Obama won't negotiate," said Geoff Garin, a Democratic pollster.

But, Garin acknowledged, the public's view on the debt limit is more complicated. Many Americans believe an increase is a license for new spending, rather than authorization to pay bills already owed.

"You do have to address people's larger concerns with the deficit," Garin said. "The president needs to make it clear, as he does, that he's willing to negotiate with the Republicans over debt reduction. But he certainly has the public on his side in saying negotiations should not involve brinkmanship on a default."

On Monday, Leon E. Panetta, Obama's former defense secretary, implicitly criticized the president's general leadership, saying, "You've got to roll up your sleeves and you've got to really engage, engage in the process."

But he endorsed Obama's refusal to negotiate on the borrowing ceiling, "to make sure that we do not continue a process of using a debt limit as kind of a nuclear weapon aimed at our own economy as a way for people to get their way."

For weeks, the president has explained his position before audiences and television cameras, and enlisted business groups increasingly worried at the brinkmanship of their traditional Republican allies.

"I'm happy to negotiate with them around the budget, just as I've done in the past," Obama told the Business Roundtable, a corporate group, in mid-September. "What I will not do is to create a habit, a pattern, whereby the full faith and credit of the United States ends up being a bargaining chip to set policy."

"It would fundamentally change how American government functions," he added. "And if you doubt that, just flip the script for a second and imagine a situation in which a Democratic speaker said to a Republican president, 'I'm not going to increase the debt ceiling unless you increase corporate taxes by 20 percent.'"

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thepartyfirstwrote:

Where's Obama's budget? He campaigned on balancing the budget. Well? The POTHUS is way over his head.